What are Long-term Assets (Noncurrent Assets)?

Equity in the construction industry refers to the financial investment made by the stakeholders in a construction project. It's essentially the difference between the overall project cost and the amount borrowed to finance it. The capital is often fund supplied by owners, investors, or shareholders. These entities get a return on their investment either through project profits, or an increase in the value of the project, thus, equity provides them with ownership rights. Interestingly, a high equity stake in projects usually indicates low leverage and low financial risk. The construction industry relies heavily on equity, particularly during large-scale projects as these require substantial financial backing. Consequently, a contractor with a higher level of equity is often regarded as more stable and trustworthy.

A Draw Request, in the realm of construction, is a formal process involving a requisition for payment for work performed on a specific job or within a specified period on a project. This request is typically submitted by contractors or subcontractors to the project owner or financier to cover labor expenses, material costs, and other related construction expenditures. A Draw request initiates a draw inspection where a third-party inspector confirms the validity of the claim. These requests aid in maintaining project transparency and ensure that funds are allocated appropriately in line with the progress of the project. This process is pivotal in effective construction project financial management.

A Schedule of Values (SOV) is a detailed breakdown of a construction contract that itemizes the total contract amount into specific work categories, phases, or deliverables. It shows the dollar value assigned to each component of work that’ll be completed during a construction project. As such, the SOV is a critical component of successful project and cash flow management. It also lays the groundwork for progress billing and payment applications (like AIA® G702/G703® forms).

Here’s how it works: 

• Contractors create initial SOVs that allocate contract value across work phases.
• They maintain the SOVs to align with actual work schedules and ensure billing requests match project progress.
• SOVs get updated when changes occur on the job, altering the original scope and budget.

As you can imagine, managing multiple SOVs across projects while tracking actual costs against line items becomes complex and time-consuming.

Siteline streamlines this entire process by integrating with major construction ERPs and accounting software. Subs import project data from their ERP into Siteline, compile and send pay apps directly in the system (accounting for any change orders), and then rest easy knowing that Siteline automatically syncs approved invoices back to the ERP. 

The result? Faster billing cycles and quicker payments. Want to see how it works? Book some time with us.